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Statue of Limitations in Credit Reporting Main Boise Home Loans
How long can negative items on your credit report REALLY be reported?

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Many of my customers who I am helping with credit repair often confuse the 7-Year reporting Period with the Statute of Limitations that applies to a creditor with regard to time allowed to legally collect debts. Let's define both:

STATUE OF LIMITATIONS

The time period that a collection agency or your creditor has to use the legal system (filing lawsuits, etc.) to collect a debt from you.

7-YEAR REPORTING PERIOD

The time allowed for derogatory items to remain on your credit report.

Let's talk first about the Statute of Limitations.

Usually, derogatory debt will eventually expire. However, this doesn't mean that the company cannot continue to try to collect the debt that they are owed. After debt expires, it simply means that they cannot file lawsuits, garnish wages, etc. Different kinds of debt have different statute of limitations, but I am only going to talk about open-ended accounts, as those are the majority of what I see as a Mortgage Consultant and loan originator.

Open-Ended Accounts -- revolving lines of credit, credit cards, etc. These types of accounts always have varying balances.

So...when does the statute of limitations start? On a charge account, it begins with your first 30-day late payment that led to the account being charged off or sent to a collection agency. If the debt is now a collection that has been sold to another company, the same rule applies. The new collection agency who owns the debt cannot "restart" the statute of limitations...it still goes from the date of the last activity or when the charge-off occurred.

I just spoke with someone at the Idaho Department of Finance, and was told that Idaho says 5 years is how long a creditor or collection agency has to pursue collection of a debt thru the court and legal system. This number can change at any time, as state laws change all the time.

In my next entry, I'll discuss the 7-Year reporting period and how long derogatory credit is allowed to remain on your credit report.

If you are interested in talking more about this post or a specific credit scoring issue you have or know about, feel free to call me at (208) 880-0316, or email me at eric@ericsloans.com. You can also visit my website at http://www.ericsloans.com.

Regards,


Eric Leigh, Mortgage Consultant
2965 E. Tarpon Drive, Ste. 150
Meridian, ID 83642
(208) 880-0316
http://www.ericsloans.com
eric@ericsloans.com
 
Posted by Eric Leigh at 10/2/2009 6:47:00 PM
Comments (1)
Re:Statue of Limitations in Credit Reporting
Great post Eric Thanks.
Trey
Posted by on 10/2/2009 12:17 PM
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Michelle Penick, Build Idaho Client Real Estate Services

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